Taiwan-based Foxconn announced on Monday that it is pulling out of a $19.5 billion semiconductor joint venture with Indian conglomerate Vedanta, dealing a setback to Prime Minister Narendra Modi’s plans to develop chip manufacturing in India.
Foxconn, the world’s largest contract electronics manufacturer, and Vedanta had signed an agreement last year to establish semiconductor and display production facilities in Gujarat, Modi’s home state.
In a statement, Foxconn stated that it has decided not to proceed with the joint venture with Vedanta, without providing further details on the reasons behind the decision.
According to Foxconn, the company had collaborated with Vedanta for over a year to transform “a promising semiconductor concept into reality.” However, they mutually agreed to terminate the joint venture, and Foxconn will remove its name from what is now an entirely Vedanta-owned entity.
Taiwan’s #Foxconn said it has withdrawn from a $19.5 billion joint venture with Indian metals-to-oil conglomerate #Vedanta, in a setback to Prime Minister #NarendraModi‘s chipmaking plans for India.https://t.co/z9DowzLtB9
— The Telegraph (@ttindia) July 10, 2023
Modi had prioritized chipmaking as a key component of India’s economic strategy, aiming to usher in a “new era” in electronics manufacturing. Foxconn’s withdrawal represents a setback to his ambitions of attracting foreign investors to produce chips locally for the first time.
Vedanta did not respond immediately to requests for comment.
While Foxconn is renowned for assembling iPhones and other Apple products, it has been diversifying its business in recent years by venturing into chip manufacturing.
Earlier reports from Reuters indicated that Modi’s plan was facing difficulties, as progress on the Vedanta-Foxconn project had been sluggish, and negotiations with European chipmaker STMicroelectronics to join as a partner had reached an impasse.
Vedanta-Foxconn had enlisted STMicro for technology licensing, but the Indian government had expressed a desire for the European company to have a greater stake in the partnership, which STMicro was reluctant to pursue. As a result, the talks remained unresolved.
India, anticipating its semiconductor market to reach a value of $63 billion by 2026, received three applications last year to establish plants under a $10 billion incentive scheme. These applications came from the Vedanta-Foxconn joint venture, global consortium ISMC with Tower Semiconductor as its technology partner, and Singapore-based IGSS Ventures.
The $3 billion ISMC project faced delays due to Intel’s acquisition of Tower Semiconductor, while IGSS’s $3 billion plan was halted as the company intended to resubmit its application.